Most feature length movies have a relatively short period of time in which to make money. Traditionally, after a feature length movie is made, it is marketed and sold through different phases of its profitable life cycle. In an initial phase, feature length movies are first released only in movie theaters and open on the same day in various theaters throughout the country. During this time, the public can only view the movie in a theater. In a subsequent phase, the movie is released on digital video disk (DVD). Successful or popular movies are distributed in a final phase when the movie is released on television.
During each of these different phases, production companies must spend money to advertise and promote the movie. In order to lure moviegoers into movie theaters, production companies must spend money advertising to their target market. Often, the amount of money spent in advertisement is quite significant. It is not uncommon for production companies to spend millions of dollars marketing movies to moviegoers. For example, if a movie is nationally released, then the production company can elect to promote the movie throughout major cities across the United States. An extensive marketing campaign can cover large geographical areas and diverse marketing groups. Hence, the costs of advertisements can quickly escalate.
Advertisement costs increase for other reasons as well. In order to reach the core group of potential moviegoers, many different marketing medias are used. Suppose a production company intends to release the next summer blockbuster movie. The production company could advertise on television, radio, the internet, posters, billboards, etc. In some instances, actors or actresses starring in the movie travel around the United States or even around various parts of the world to promote the release of the movie. An enormous marketing budget can be consumed before the movie even opens to the public in theaters.
Thus, during the profitable lifecycle of a movie, production companies spend large amounts of money in marketing and selling the movie. Advertisement costs can accrue while the movie is being shown in theaters, while the movie is being distributed on DVD, and again while the movie is being shown on television, cable, or satellite.
In short, the traditional model for marketing, selling, and distributing a feature length movie can be quite complex and expensive.